Investment Grade Quarterly Update – January 2026

Key takeaways

• The strong technical backdrop supporting fixed income throughout 2025 was tested in Q4, as several risks appeared to materialise, but markets proved resilient.
• 2025 delivered solid returns, with a pronounced spike in volatility concentrated in a single month following the announcement of US tariffs. Despite this, returns were remarkably smooth over the year.
• We expect volatility in markets to remain elevated in 2026, and with credit spreads at their tightest levels since the Global Financial Crisis (GFC) we believe it is prudent to avoid cyclical issuers and more aggressive financial exposures.